BGH on Legal Succession for UK Limited Companies After Brexit
The Bundesgerichtshof (BGH, Federal Court of Justice) ruled in its judgment of 14 July 2026 – II ZR 202/25 – on the corporate-law treatment of a UK Limited with its registered office in the United Kingdom and its actual administrative headquarters in Germany after Brexit. The decision bears the ECLI:DE:BGH:2026:140726UIIZR202.25.0 and is intended for inclusion in the official BGHZ collection as well as in BGHR and JNEU.
At the heart of the case was the question of whether the sole shareholder of such a Limited is to be regarded as the legal successor of the company after the expiry of the transition period pursuant to Art. 126 of the Brexit Agreement (Withdrawal Agreement between the EU and the United Kingdom). The Second Civil Senate answered this in the affirmative and confirmed that a creditor holding an enforceable title still issued against the Limited may be granted an enforceable execution copy against the sole shareholder pursuant to § 727 para. 1 ZPO (German Code of Civil Procedure).
The Bundesgerichtshof dismissed the claimant’s appeal on points of law against the judgment of the 5th Civil Senate of the Kammergericht (Berlin Higher Regional Court) of 29 August 2025 at his expense. The lower courts were the Landgericht Berlin II (Berlin II Regional Court) and the Kammergericht. The Senate ruled following an oral hearing in the composition Wöstmann, Dr. Bernau, Prof. Sander, Dr. von Selle and Dr. C. Fischer.
Background to the Proceedings
Enforceable Title Against Limited and Sole Shareholder
The proceedings were based on an earlier judgment of the Kammergericht dated 7 September 2018. In an action brought by the later defendant, a UK Limited with its registered office in the United Kingdom and administrative headquarters in Germany, as well as its sole shareholder, the later claimant, had been ordered, among other things, to cease and desist, to provide information and to pay EUR 1,973.90 each plus interest. In addition, their liability for damages had been established.
Subsequently, by cost-fixing orders dated 9 January 2020 and 30 April 2020, the Landgericht Berlin II fixed the reimbursable costs at EUR 3,672.40 plus interest and EUR 17,188.59 plus interest. On 29 April 2022, a legal succession clause on the debtor side was issued for the judgment and the two cost-fixing orders against the sole shareholder as legal successor of the Limited.
The sole shareholder challenged this by way of an action opposing the execution clause pursuant to § 768 ZPO (German Code of Civil Procedure). This was already unsuccessful at first instance. The Kammergericht declared enforcement based on the legal succession clause inadmissible with regard to injunctive relief and the provision of information and dismissed the remainder of the appeal. With the appeal on points of law, which was allowed, the claimant continued to pursue his further request, but was unsuccessful before the Bundesgerichtshof.
Central Legal Question
The decisive issue was whether the Limited was still to be treated in Germany as a legal person in the form of a corporation after Brexit or whether its assets passed to the sole shareholder as a result of the loss of its legal capacity. This determined whether the titles already issued against the Limited could be made enforceable against the sole shareholder by means of a legal succession clause.
The Bundesgerichtshof based its assessment on the fact that the company was a Limited with its registered office in the United Kingdom and its actual administrative headquarters in Germany. In the Senate’s view, the decisive factor for classification was not the registered office, but the place of actual management.
Loss of Legal Capacity After Brexit
No Reliance on Freedom of Establishment
According to the decision of the Bundesgerichtshof, a Limited incorporated under the law of the United Kingdom can, in principle, no longer rely on freedom of establishment under Art. 49 and Art. 54 TFEU (Treaty on the Functioning of the European Union) after the United Kingdom’s withdrawal from the European Union. In this respect, the Senate followed its earlier case law, in particular the order of 16 February 2021 – II ZB 25/17.
The Limited concerned had lost its legal capacity in Germany after the United Kingdom’s withdrawal from the European Union. In the grounds of the decision, it states that, with the loss of legal capacity, the company’s assets passed to the claimant by way of universal succession with effect from 1 February 2020.
The legal approach applied by the Bundesgerichtshof can be summarized in several points:
- A corporation incorporated abroad that is not legally capable under German law and has its administrative headquarters in Germany is generally classified under German law.
- The decisive factor is the place where management is actually conducted, not the registered office stipulated in the articles of association.
- Where there are several shareholders, treatment as a legally capable partnership is generally possible.
- Where there is only one shareholder, the associative bond between several persons is lacking.
- In this case, according to the decision, an individually owned sole-trader business is to be assumed.
Personal Liability of the Sole Shareholder
Because the Limited had only one shareholder, the Bundesgerichtshof did not assume the continued existence of a company with several participants. Rather, it held that, where there is only one shareholder, an individually owned sole-trader business exists due to the absence of an associative bond between several persons.
In the Senate’s view, this resulted in the sole shareholder’s full and unlimited personal liability. The claimant was therefore treated as the legal successor of the Limited. On this basis, the issuance of an enforceable execution copy of the titles against him pursuant to § 727 para. 1 ZPO was permissible.
Trade and Cooperation Agreement Does Not Lead to a Different Assessment
No Equivalence with Freedom of Establishment
The Bundesgerichtshof also examined whether a different assessment follows from the Trade and Cooperation Agreement concluded on 24 December 2020 between the European Union and the United Kingdom, the EU-UK Trade and Cooperation Agreement. The agreement entered into force definitively on 1 May 2021 and regulates, among other things, issues of market access.
In the Senate’s view, Art. 128 TCA on market access, Art. 129 TCA on national treatment and Art. 130 TCA on most-favoured-nation treatment do not create a legal position for companies incorporated under the law of the United Kingdom that is equivalent to freedom of establishment under the case law of the Court of Justice of the European Union (CJEU).
Accordingly, in the Bundesgerichtshof’s view, it does not follow from the TCA that British companies with German administrative headquarters would continue to have to be recognized in Germany as corporations under the incorporation theory. The Senate emphasized that the agreement contains provisions on trade in goods and services, capital movements and investments, but that freedom of establishment must be distinguished from these.
Limited to Investment Liberalization
According to the decision, the regulatory content of Art. 128 et seq. TCA is limited to the liberalization of investments. From the perspective of the Bundesgerichtshof, the contracting parties did not intend to extend the EU-law freedom of establishment to companies from the United Kingdom.
The Senate thus expressly addressed an opinion held in some quarters, according to which the TCA could support the continued recognition of British companies in Germany under the incorporation theory. The Bundesgerichtshof did not follow this view.
No Protection of Legitimate Expectations and No Reinterpretation as a UG
Transition Period Until the End of 2020
The claimant unsuccessfully invoked legitimate expectations or a prohibition of retroactive effect. In Art. 126 of the Brexit Agreement, which provided for a transition period until 31 December 2020, the Bundesgerichtshof saw a sufficient transition period for British companies with administrative headquarters in Germany.
In the Senate’s view, during this period there was an opportunity to respond to the impending changes. The Bundesgerichtshof also pointed out that the German legislature, through the Fourth Act Amending the Umwandlungsgesetz (German Transformation Act), had opened up restructuring options via §§ 122a et seq. UmwG (German Transformation Act).
The legislature did not create more extensive protective provisions for British companies with German administrative headquarters that had already been incorporated. The Bundesgerichtshof saw no reason in this to continue applying the incorporation theory in enforcement proceedings.
No Fiction as a UG haftungsbeschränkt
The Bundesgerichtshof also rejected reinterpreting a UK Limited after Brexit as a UG (haftungsbeschränkt) (entrepreneurial company with limited liability). The Senate could not identify any corresponding intention of the legislature manifested in statutory law.
Nor did the case law of the Bundesfinanzhof (BFH, Federal Fiscal Court) on the tax treatment of a UK Limited lead to a different result in the view of the Bundesgerichtshof. For corporate income tax classification of a foreign company, civil-law legal capacity is not decisive; rather, tax-law capacity, determined by a comparison of legal types, is decisive. Civil-law and tax-law treatment may therefore diverge.
Significance for Enforcement and Corporate Law
Legal Succession Clause Against the Sole Shareholder
The decision is of particular significance for cases in which titles were issued against a UK Limited with German administrative headquarters before the loss of legal capacity. According to the Bundesgerichtshof’s approach, a creditor holding an enforceable title issued against the Limited may be granted an enforceable execution copy against the sole shareholder as legal successor, provided that the requirements of § 727 para. 1 ZPO are met.
The Bundesgerichtshof confirmed that the facts on which the legal succession that occurred by operation of law was based were, in the specific case, manifest to the court. § 722 para. 2 BGB (German Civil Code) did not preclude enforcement against the claimant on the basis of the title.
In practical terms, the decision particularly concerns enforcement based on legacy titles against UK Limited companies with administrative headquarters in Germany. For creditors, the legal succession clause may open up access to the sole shareholder, provided that the requirements described by the Bundesgerichtshof are met.
No Referral to the Court of Justice of the European Union
The Bundesgerichtshof saw no reason to refer a question to the Court of Justice of the European Union for a preliminary ruling pursuant to Art. 267 TFEU. In the Senate’s view, the position under EU law was clear.
During the transition period under Art. 126 of the Brexit Agreement, the United Kingdom was still to be treated as a Member State in relation to the European Union, unless otherwise provided. After expiry of the transition period, the United Kingdom is a third country in relation to the European Union. Trade relations have since been governed by the TCA, without this giving rise to a legal position for British companies corresponding to freedom of establishment under EU law.
Assessment from the Perspective of MTR Legal Rechtsanwälte
The judgment of the Bundesgerichtshof provides clarity for the corporate-law and civil-procedure treatment of UK Limited companies with German administrative headquarters after Brexit. The Senate combines the abandonment of the EU-law-based recognition of British companies with the application of the real seat theory and, in the case of a single-member Limited, arrives at universal succession by the sole shareholder.
The legal assessment of such structures depends substantially on the specific arrangement, in particular on the actual administrative headquarters, the number of shareholders, existing titles and the respective legal basis of the claim. MTR Legal Rechtsanwälte advises companies, investors and high-net-worth individuals on corporate-law issues with a cross-border dimension and on the assessment of liability and enforcement risks in connection with foreign companies. Further information can be found at Legal advice in corporate law.
